selection of agency for development and operation of … towards west, thotapalligudur mandal...
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BIDDING DOCUMENT
Issued on: 06.11.2016
for the
Selection of agency for development and
operation of Beach Resort at Mypadu in
Andhra Pradesh under Operate and
Maintenance Contract
Authority: Andhra Pradesh Tourism Development
Corporation
Vol II: Terms of Reference (ToR) and Project Profile
Feasibility Report for Operations & Maintenance of
APTDC Beach Resort at Mypadu
Contents of RFP
43T143T 43TTerms of Reference (ToR)43T 3
43T243T 43TScope Data Sheets 43T 8
43T1.43T 43TANNEXURE43T 14
43T1.1.43T 43TAnnexure-I: Property site/ facilities: Mypadu beach RESORT 43T 14
43T1.1.1.43T 43Tcapital expenditure43T 14
Feasibility Report for Operations & Maintenance of
APTDC Beach Resort at Mypadu
1 Terms of Reference (ToR)
1.1 About the project
The proposed property is at Mypadu in Nellore district, Andhra Pradesh. The Operator will
have to develop additional rooms, market the property and provide all services to the guests
as per the standards from a facility which is rated as 2 stars or above.
1.2 Rationale for the project
Government of Andhra Pradesh (GoAP) vision is to be amongst the top 3 States in India by
2022, the top State in India by 2029, and be the most preferred global destination by 2050.
The government is taking steps to provide an environment conducive to economic and social
growth. These steps include formulation of investment friendly policies, creating world-class
infrastructure, improving governance and taking necessary steps to attract investments into
the State. Promotion of tourism infrastructure and services at potential destinations is one
amongst the many initiatives taken up by the GoAP.
In line with the objective to make Andhra Pradesh the premier destination for tourists in the
country, Government of Andhra Pradesh has identified nine key theme areas to be developed.
The theme areas are listed below:
Religious Tourism
Recreation Tourism
Beach Tourism
Buddhist Tourism
Spiritual & Wellness Tourism
Heritage Tourism
Medical Tourism
MICE Tourism
Eco Tourism
Tourist arrival Trend
Andhra Pradesh has the distinction of being a leading tourism destination in India and is
presently, the Third most visited State in terms of domestic tourists arrivals. Following table
highlights the district wise tourist arrival in AP in FY 2015:
District
2015 Arrivals
Rank Domestic
(Million) % Rank International %
Chittoor 1 38.37 31.6% 3 9,231 3.9%
East Godavari 2 17.44 14.3% 9 507 0.2%
Krishna 3 14.41 11.9% 6 4,626 1.9%
Srikakulam 4 11.51 9.5% 8 582 0.2%
Visakhapatnam 5 11.44 9.4% 2 69,483 29.2%
Feasibility Report for Operations & Maintenance of
APTDC Beach Resort at Mypadu
Source: Ministry of Tourism, 2016
There has been steady increase in both domestic and international tourist arrivals from 2011-
12 to 2015-16.
Current Scenario and Potential for Hotel Rooms in AP
Performance of existing hotels in AP
• Statewide RevPAR performance of existing hotels was recorded at INR 2,010 in
2015-16 (15.4% growth over 2014-15)
• Following graph indicates growth of branded hotel rooms and increasing occupancy
ratio of same over 3 years.
West Godavari 6 8.29 6.8% 11 96 0.0%
Kurnool 7 5.22 4.3% 10 219 0.1%
Guntur 8 4.75 3.9% 7 1,135 0.5%
Kadapa Y.S.R 9 3.60 3.0% 13 0.0%
Vizianagarm 10 3.04 2.5% 5 5,981 2.5%
Nellore 11 2.12 1.7% 4 8,141 3.4%
Prakasam 12 0.71 0.6% 12 6 0.0%
Anantapur 13 0.69 0.6% 1 137,847 58.0%
121.59
237,854
Feasibility Report for Operations & Maintenance of
APTDC Beach Resort at Mypadu
Demand and Supply scenario of branded hotel rooms
Presently there is high demand of branded hotel rooms in AP.
Supply of Branded Rooms is only 44% of total rooms
Following graph indicates the CAGR growth in Supplyand demand of branded room from
2013-2016.
As seen from the excellent performance of existing branded hotels and high Supply demand
gap for branded hotel rooms, AP presents a tremendous opportunity for development of
Hotels/Resorts and MICE
1.3 Applicable incentives, subsidies and benefits
The project shall be eligible for incentives, subsidies and benefits as per the Andhra Pradesh
Tourism Policy 2015-20. These include:
6.40%
11.40%
Supply Demand
S. No Incentive category Incentives
a) Complementary/Lin
kage Infrastructure
a. Access Roads
b. Water supply
point
c. Power supply
d. Sewerage
connection
Total Project Cost
< Rs 50 crores
Total Project Cost
from Rs 50-100
crores
Total Project Cost
from Rs 100 -
200 crores
Up to a maximum
of 5% of total
project cost or Rs
2 crore,
whichever is less
Up to a maximum
of 7.5% of total
project cost or Rs
5 crores,
whichever is less
Up to a maximum
of 15% of total
project cost or Rs
10 crores,
whichever is less
Feasibility Report for Operations & Maintenance of
APTDC Beach Resort at Mypadu
1.4 Mypadu, Nellore District
Mypadu Beach is located on the west coast of Bay of Bengal, at a distance of 25 km
from Nellore in Andhra Pradesh. The beach provides fishing opportunities for the local
fishermen, and access to cruises for the tourists.
Korutur (3 KM), Komarika (5 KM), Mudhivarthi (6 KM), Kudithi Palem (6 KM),
Reddipalem (6 KM) are the nearby villages to Mypadu. Mypadu is surrounded by Vidavalur
Mandal towards west, Thotapalligudur Mandal towards South, Kodavalur Mandal towards
west, Kovur Mandal towards west.
Nellore, Gudur, Kavali, Kandukur are the nearby cities to Mypadu.
b) Land Conversion
Charges
Waiver of Non-Agriculture Land Assessment (NALA) tax
or Land Use Conversion charge, as applicable
c) Registration and
Stamp duty
100% reimbursement on Registration and Stamp duty for all
Tourism Infrastructure Projects
d) VAT/CST/SGST 5% for all new Tourism Infrastructure projects from date of
commencement of operations. Necessary amendments to
relevant clause(s) in the Andhra Pradesh Value Added Tax
Act 2005 to be made.
e) Luxury Tax 100% exemption of Luxury Tax for all new Tourism
Infrastructure projects for a period of 3 years from date of
commercial operations
f) Entertainment Tax 100% exemption of Entertainment Tax for first 3 years from
date of commercial operations
g) Energy Tariffs Tariff as per the rates provided in the “H.T. Category-III:
Airports, Railway Station and Bus Stations” in the Andhra
Pradesh Electricity Regulatory Commission (APERC)
Tariffs
Nellore
Feasibility Report for Operations & Maintenance of
APTDC Beach Resort at Mypadu
Feasibility Report for Operations & Maintenance of
APTDC Beach Resort at Mypadu
2 Scope Data Sheets
2.1 Scope Data Sheet for Development of the project
2.1.1 Project Information memorandum
S. No Item Details
1 Land basic value Not Applicable
2 Upset Price –Minimum Assured Annual Revenue Share
(Rs. Lakhs)
27
3 Percentage Share of Total Revenues 11%
4 Google Map Not Applicable
6 Survey no. Not Applicable
7 Village Mypadu
8 District Nellore
9 Survey map Not Applicable
10 Engineering survey Not Applicable
11 Master plan ( if any) Not Applicable
2.1.2 Connectivity
Distance of Airport Railway station Bus station
Mypadu 100 Km
Tirupati
19 Km
Padugupadu
8 Km
Mypadu
2.1.3 Proximity to various location / nearest tourist attractions
S.No Name of the place Distance from the
project site
Importance of place
1 Nelapattu Bird
Sanctuary
101 Km Important breeding site for
spot-billed pelicans. 187 bird
species can be found here
Feasibility Report for Operations & Maintenance of
APTDC Beach Resort at Mypadu
2.2 Minimum Development Obligations
APTDC proposes to place its resort property at Mypadu, under Renovation, construction and
operation and maintenance by reputed private operators. The development of additional
rooms is envisaged to be on a Public Private Partnership (PPP) basis for the Service period of
30 years. APTDC proposes to contract reputed hotel / resort operators to manage these
properties on an “as-is-where-is” basis. The hotels shall have all modern facilities, conform to
development guidelines and should apart from conforming to the minimum standards laid
down by the APTDC, also incorporate best practices and standards practiced in the industry.
These terms and conditions will be specified in the Service Agreement between APTDC and
the Successful Bidder. The scope of work for the selected bidder/bidders shall include O&M
of existing facility and inter alia construction of additional rooms, interior decoration or
renovation, marketing, operations and management of the hotel Projects in accordance with
the provisions of the RFP comprising of Terms & Conditions, Scope of work and Service
Agreement.
The service provider will have to market the property and provide all services to the guests as
per the standards from a facility which is rated as 2 stars or above. It will include all room
services cleaning, cleaning and maintenance services, food and beverage services, banquet
and related services. It will also include transport and logistics required, travel desks, any
health club / spa services if required. The Operator will be entitled to fix the prices of these
services and change the rates thereof whenever it deems it. The service provider will have to
provide rate lists to APTDC and certified revenue statements every month (at the end of the
month within 7 days) with detailed break up various heads revenues.
Transaction structure: Following are the details of budget allocated and expected
infrastructure to be developed:
S. No Particulars Mypadu
1 Existing number of
rooms 16
2
Number of
rooms/cottages to be
added
19
3 APTDC will provide Existing operational property with 16 rooms and restaurant.
4 Operator will be
required to do
Construct minimum 19 additional rooms/accommodation
Upgrade existing rooms
Internal furnishing of all the rooms
Landscaping of the property
Interior furnishings and all movable equipment required for
running the hotel
All furniture, updation and replacement of air conditioning
systems in the entire premises
Upgradation of restaurant
Feasibility Report for Operations & Maintenance of
APTDC Beach Resort at Mypadu
Improvement to landscaping provided by APTDC
All moveable equipment (for kitchens, rooms, ancillary services
etc.)
Construction of Swimming pool if viable
5 Operational
Requirement Operate as 2-star or above
6. Costing All activities to undertaken by the operator at their own
expenses after the handing over of the property by APTDC
2.2.1 Feasibility of the project
The list of finishing works to be undertaken by the operator is listed at section 4 of
Transaction structure part of this volume. The estimated cost of the works is about INR 421
lakh.
2.2.2 Project Operations
The facility will conform to the standards of a 2 star or higher category. The project is
assumed to be operational 365 days a year, with average occupancy for the rooms is expected
to be 25% for first year of operation, 50% for 2nd and 3rd year, 55% for 4th and 5th year, and
60% there onwards till service year. It can be noted that the occupancy numbers are quite
conservative.
2.2.3 Revenues from the Project
The project is expected to have the following revenue streams
1 Revenue from room tariff
2 Revenue from food and beverages
2.2.4 Revenue from Rooms Tariff
The room tariff assumed based on inputs from department of tourism, Andhra Pradesh and
are as follows
Particular
Type of facility Double occupancy rooms
Nos. 35
Room Tariff (starting) INR 2000
2.2.5 Revenue from Food and beverages
Food and Beverages revenue, a significant contributor to the profits of a hotel, is assumed to
be INR 600 per occupied single room/tented rooms.
All average spending figures for restaurant will increase by 5% YoY basis.
2.2.6 Profitability of the facility
The profits for the project would be the following
Feasibility Report for Operations & Maintenance of
APTDC Beach Resort at Mypadu
— Profitability from of rooms: The profitability has been assumed to be about 35% for all
the years.
— Profitability on Food & Beverage and bar services: The profitability has been assumed to
be 45% for all the years.
— Room tariff is assumed to be escalated at 5% per annum, to account for inflation in
operation and maintenance (O&M) expenses
— The service period of 30 years commences after the moratorium period, which is
maximum of 5 months from the date of signing of SA for property.
— The Project IRR is estimated to be 18.7% for the investment of the operator even after
paying 11% of gross revenues to APTDC. This indicates a profitable investment.
2.2.7 Licenses and approvals
All construction, operation and related licenses will be the responsibility of the successful
bidder(s)
The developer is responsible for obtaining all the facility related licenses. The developer shall
obtain all licenses from relevant authorities for the operation of their corresponding hotel
Project. The APTDC shall assist the Successful Bidder (s) on a best effort basis for the same.
i. After APTDC handing over the site to the Operator, the Operator will complete the
obligations and make the Project operational. If the Operator fails to make the project
operational within the time specified by section for the specific project, the Minimum
Assured Annual Revenue Share will still become payable.
ii. In the case the operator is unable to make the property operational even after the lapse of the
specified period, APTDC may at its discretion extend the period without prejudice to the
rights to receive payments as above. In case, if the project is not completed even then, it will
be treated as an event of default and will be dealt with in accordance to the Service
Agreement.
2.2.8 Minimum Service Obligations
i. After APTDC handing over the site to the Operator, the Operator will complete the
obligations defined in the above table and make the Project operational. If the Operator fails
to make the project operational within the time specified by section for the specific project,
the Minimum Assured Annual Revenue Share will still become payable.
ii. In case hotel becomes operational earlier than the specified period (as per section 4), the
revenue share will become payable from the date of the hotel becoming operational.
iii. In the case the operator is unable to make the property operational even after the lapse of the
specified period; APTDC may at its discretion extend the period without prejudice to the
rights to receive payments as above.
iv. In case, if the project is not completed even then, it will be treated as an event of default and
will be dealt with in accordance to the Service Agreement.
Feasibility Report for Operations & Maintenance of
APTDC Beach Resort at Mypadu
The Operator shall at its own cost and expense:
a. The Operator has to run the APTDC property at the awarded site as a two star or higher
rating hotel facility
b. Operator is entitled at set the tariff terms for all facilities and services it provides at the
property and also entitled to change such rate whenever it deems fit. However at the end
of each quarter the operator will provide a detailed breakup of the revenue at the end of
each quarter.
c. Investigate, study, operate and maintain the Project Assets/Project Facility in accordance
with the provisions of this Agreement, Good Industry Practice and Applicable Laws;
d. Obtain all Applicable Permits in conformity with the Applicable Laws and be in
compliance with thereof at all times during the Service Period;
e. Procure and maintain in full force and effect, as necessary, appropriate proprietary rights,
licenses, agreements and permissions for materials, methods, processes and systems used
in or incorporated into the Project;
f. Ensure that each Project Agreement contains provisions that would entitle APTDC or a
nominee of APTDC to step into such agreement at APTDC’s discretion, in place and
substitution of the Operator in the event of Termination pursuant to the provisions of this
Agreement; provide all assistance to the APTDC as they may reasonably require for the
performance of their duties and services under this Agreement;
g. Provide, to the APTDC Officials, reports on a regular basis during the Operations Period
in accordance with the provisions of this Agreement;
h. Appoint, supervise, monitor and control the activities of Contractors / Staff or any other
service provider under their respective Project Agreements as may be necessary;
i. Develop, implement and administer a surveillance and safety program for the
Project/Project Facility and the users thereof and the personnel engaged in the provision
of any services under any of the Project Agreements including correction of safety
violations and deficiencies, and taking of all other actions necessary to provide a safe
environment in accordance with Applicable Laws and Good Industry Practice;
j. Take all reasonable precautions for the prevention of accidents on or about the Project
Site/Project Facility and provide all reasonable assistance and emergency medical aid to
accident victims;
k. Not to place or create nor to permit any contractor or vendor or service provider or any
other person claiming through or under the Operator to create or place any Encumbrance
over all or any part of the Project Assets, or on any rights of the Operator therein, save
and except as expressly set forth in this Agreement;
l. Be responsible for safety, soundness and durability of the Project Facility including all
structures forming part thereof and their compliance with the Specifications and
Standards;
m. Ensure that the Project Site remains free from all encroachments and take all steps
necessary to remove encroachments, if any;
n. Operate and maintain the Project at all times during the Operations Period in conformity
with this Agreement including but not limited to the Specifications and Standards, the
Maintenance Programme and Good Industry Practice;
o. Remove promptly according to Good Industry Practice, from the Project Site, all surplus
construction machinery and materials, waste materials (including, without limitation,
hazardous materials and waste water), rubbish and other debris (including without
limitation accident debris) and keep the Project Site in a neat and clean condition and in
conformity with the Applicable Laws and Applicable Permits.
Feasibility Report for Operations & Maintenance of
APTDC Beach Resort at Mypadu
p. Provide to APTDC at the end of each quarter/month as agreed in the SA audited profit
and loss statement within 7 days of the end of the quarter / month
q. Provide access to the auditors and inspectors of APTDC whenever APTDC chooses to
conduct such audit or assessment.
r. All necessary clearances and permits required from the relevant authorities should be
obtained by the Successful Bidder and the Successful Bidder shall adhere to all relevant
guidelines/ recommendations / standards/ requirements prescribed by statutory bodies,
Central/ State Government and its ministries / agencies, professional bodies and
associations as applicable including adherence to labor laws to Employee State Insurance,
Provident Fund, etc.
s. The successful bidder may be further permitted to construct additional rooms/facilities as
may be required to make the property more attractive to tourists. All such addition can be
either permanent/ semi-permanent constructions after obtaining all requisite permissions
and clearances from the competent authorities.
2.2.9 Insurance
The Operator shall, at its cost and expense, purchase and maintain during the Operations
Period insurance to cover against:
(a) loss, damage or destruction of the Project Facility, at replacement value;
(b) the Operator’s general liability arising out of the Service;
(c) liability to third parties; and
(d) any other insurance that may be necessary to protect the Operator and its
employees, including all Force Majeure Events that are insurable and not
otherwise covered in items (a) to (c).
The Operator shall pay the premium payable on such insurance policy (ies) so as to keep
the policy(ies) in force and valid throughout the Service Period and furnish copies of the
same to APTDC. Each insurance policy shall provide that the same shall not be cancelled
or terminated unless 10 Days' clear notice of cancellation is provided to APTDC in
writing. If at any time the Operator fails to purchase and maintain in full force and effect
any and all of the insurances required under this Agreement, APTDC may at its option
purchase and maintain such insurance and all sums incurred by the APTDC therefor shall
be reimbursed by the Operator forthwith on demand, failing which the same shall be
recovered by the APTDC by exercising right of set off or otherwise.
2.2.10 Conclusion
The resort facilities at Mypadu will enable leisure tourists visiting here to stay for 2-3
nights and could offer exciting packages and desired services to all kind of tourists.
Apart from regular bookings the operator can also market this property to large
companies having presence in Mypadu to organize offsite parties and annual meet.
Also, it will contribute to the vision of the Government of Andhra Pradesh in catalyzing
tourism growth in the State, and leverage its unexplored natural assets for increasing
tourism inflow and creation of infrastructure.
Feasibility Report for Operations & Maintenance of APTDC Beach Resort at Mypadu
1. ANNEXURE
1.1. ANNEXURE-I: PROPERTY SITE/ FACILITIES: MYPADU BEACH RESORT
1.1.1. CAPITAL EXPENDITURE
Capital Expenditure
Calculation For expenses on Tents
Assumption
year 1 year 2 year 3
Per room expenses 3 Lakh INR Room 19 0
No of rooms 16
Price (Lakh INR) 14.5 5
Total Expenses directly on rooms 48 Lakh INR
Furnishings 3
Restaurant 25 Lakh INR
Total 332.5 0
Other Plant & Machinery 15 Lakh INR
Total direct expenses on cottages 332.5 TOTAL CAPITAL EXPENDITURE 420.5
Feasibility Report for Operations & Maintenance of APTDC Beach Resort at
Mypadu
Feasibility Report for Operations & Maintenance of APTDC Beach Resort at Mypadu
Feasibility Report for Operations & Maintenance of APTDC Beach Resort at Mypadu